American Business Conference

Congress is currently considering whether to incorporate into financial reform legislation a variety of corporate governance changes.  One such change under consideration involves directing the Securities and Exchange Commission to formulate rules allowing broader access to issuer proxies with the intention of permitting dissident shareholders to nominate alternative candidates for corporate boards.  ABC has already filed a comment letter to the SEC on this matter.  We also address the issue –and our skepticism about Congress enacting corporate governance “reforms” — in this letter to Senator Michael Crapo of the Senate Banking Committee.

The American Business Conference (ABC)  continues to press the need for policies to encourage individual shareholders to take a more active role in the governance of the corporations whose stock they own.  One way for that to happen is through the implementation of client directed voting (CDV).  This article, published in the Harvard Law School’s Forum on Corporate Governance and Financial Regulation and written by Frank Zarb, Jr., a Washington securities attorney, and ABC’s president, John Endean, makes the case for CDV yet again.

While institutional investors in public companies typically vote their shares, often with the help of proxy advisers, individual investors with brokerage accounts typically do not vote.  In fact, the rate of individual shareholder voting is today at an all time low, a problem that is beginning, justly, to worry observers at the Securities and Exchange Commission as well as the leaders of small and midsize companies whose shares are disproportionately owned by individuals compared to the ownership patterns found among big businesses.

To address the problem of the low rate of individual shareholder voting, ABC supports the establishment of Client Directed Voting or CDV.  We describe this proposal in a recent article in Directors and Boards, which can be accessed here.